The 8 Best Short Term Investment Strategies for Beginners

March 23, 2019 0

You probably have some money saved that you would like to invest, but you do not like the idea of locking your money for an extended period. If this is the case, you are better off shopping for the best short-term investment deals. These investments are always safer in a volatile market. There are fewer risks, and you can still earn a small interest on your savings.

There are plenty of short term investment strategies that you can consider. Choose an investment strategy that gives you the highest return within a short time frame. Avoid any high risky investments and instead, look for investments that offer a guaranteed rate of return.

A short-term investment will give you an opportunity to take advantage of rising interest rates without locking your money for years. Short-term investments usually go up to three years and sometimes five years. There are many short-term high yield investments available as well. These short term investment strategies offer more returns compared to low-risk or high-risk investments. However, investments with a higher risk always provide a higher rate of return.

You can contact a financial advisor to provide you with more information. They can determine your risk tolerance and accordingly advise you of your options. Here are the best short term investment strategies for beginners:

1. GIC

Guaranteed Investment Certificates (GIC) are the best short term investment strategies in terms of safety. You are offered a guaranteed rate of return over a specific time. You can earn 3.10% for a year with the right financial institution. There are also options for earning 2.85% each year for three years.

It is always wise to shop around for different GIC rates to see what financial institutions offer before you invest. Make sure to opt for a redeemable GIC if you think you may need to access the funds. If not, a non-redeemable will work if you plan on keeping it locked until the maturity date.

2. Savings Account

There are financial institutions that offer a high-interest rate for a simple online savings account. The best online savings account can provide you with a 2.25% interest rate or higher per year. Take some time to research various financial institutions that can offer you a high rate of interest.

Many of these financial institutions do not require a minimum balance or a monthly fee, so you are free to put the minimum you want. Of course, with more, you can earn a higher return.

3. Short-Term Bonds

Short-term bonds can go up to 3 years or under 5 years offering you a fixed income. It is a certificate you receive for the contributions you make to a company or government. The interest rate will be less compared to long-term bonds, but you still can earn on the investment amount. It is a low-interest risk investment compared to long-term bonds. The issuer of the bond commits to paying interest over a fixed period and will repay the loan on a set date.

4. TFSA

Maybe you want to buy a new car, make a down payment for your home or even go on a long vacation. At the moment, you want to save the funds and earn a return on the savings. If you have a plan to save or invest in getting a return within one to three years, then a Tax-Free Savings Account (TFSA) is the ideal solution. The income earned in this account is tax-free and you can withdraw the money at any time.

5. Short-term Trading

If you are looking for profitable short term investment strategies, this type of investment can be very lucrative, but risky at the same time. Before taking any risks, you should take the time to understand how it works. You should know how to protect your investment and spot the ones that are likely to be profitable. Learn the overall cycles and patterns which can determine the right time to invest.

6. Treasury Securities

You can obtain treasury securities that are a short term obligation with a maturity of one year or less. The federal or provincial government issues this type of investment at amounts ranging from $1000 to $1 million. It can be sold before the maturity date.

7. Lending Club

This investment is known as peer-to-peer lending where you can invest in small businesses. You are providing a loan to the business owners who pay you a monthly income along with an interest rate. You can start by lending small amounts until you are confident with the returns and the company’s prospects. The loan amounts are usually starting from $5000 and go up to $250,000.

8. Real Estate Crowdfunding

Relatively new to the market, this type of investment supports real estate operations. You lend your savings to a real estate project in return for a fixed interest rate which is usually 8 to 12% per year. You can decide the amount you want to invest, and the maturity dates you prefer which can be 1, 2 or 3 years.